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The Register of Copyrights testified this morning before the House Subcommittee on Courts, the Internet, and Intellectual Property, urging them to repeal the section 115 compulsory license for the making and distribution of phonorecords of musical works and to restructure the collective licensing of performance and reproduction rights in musical works.

Her written testimony is here.

It includes a “discussion draft” of the “21st Century Music Licensing Reform Act”, which repeals the section 115 compulsory and authorizes any PRO (ASCAP, BMI, or SESAC) to license the reproduction and distribution, as well as public performance, of any work in its repertoire.

One major concern that any repeal of the section 115 compulsory raises is the issue of “cover” versions of songs. The fact that songwriters are compensated for, but do not control, new recordings of their songs has led to a flourishing of creativity — look, for example, at Seu Jorge’s versions of Bowie songs or Nouvelle Vague’s bossa nova renditions of 80s New Wave classics. The Register’s proposal cleverly avoids this problem by forcing songwriters who license their works for public performance through a PRO (which is pretty much everybody) to license “cover” versions through the same PRO.

The Register’s testimony includes a short statement on piracy, but it’s the sort of statement about piracy that I’m glad to see the Register making. Instead of advocating ever-harsher clampdowns on consumer uses of copyrighted works, she recognizes that piracy can only be minimized by providing a product consumers want at a price they’re willing to pay:

The increased transactional costs (e.g., arguably duplicative demands for royalties and the delays necessitated by negotiating with multiple licensors) also inhibit the music industry’s ability to combat piracy. Legal music services can combat piracy only if they can offer what the “pirates” offer. I believe that the majority of consumers would choose to use a legal service if it could offer a comparable product. Right now, illegitimate services clearly offer something that consumers want, lots of music at little or no cost. They can do this because they offer people a means to obtain any music they please without obtaining the appropriate licenses. However, under the complex licensing scheme engendered by the present Section 115, legal music services must engage in numerous negotiations which result in time delays and increased transaction costs. In cases where they cannot succeed in obtaining all of the rights they need to make a musical composition available, the legal music services simply cannot offer that selection, thereby making them less attractive to the listening public than the pirates. Reforming Section 115 to provide a streamlined process by which legal music services can clear the rights they need to make music available to consumers will enable these services to compete with, and I believe effectively combat, piracy.

The proposed bill reads as follows:

109th CONGRESS
1st Session
DISCUSSION DRAFT

To amend chapters 1 and 5 of title 17, United States Code, relating to the licensing of performance and mechanical rights in musical compositions.

IN THE HOUSE OF REPRESENTATIVES

________, 2005

__________ introduced the following bill; which was referred to the Committee on the Judiciary
A BILL

To amend chapters 1 and 5 of title 17, United States Code, relating to the licensing of performance and mechanical rights in musical compositions.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the ’21st Century Music Licensing Reform Act’.

SEC. 2. DEFINITIONS REVISED.

(a) Section 101 of title 17, United States Code, is amended by:

(i) deleting the definition of “performing rights society”, and

(ii) adding the following definition:

‘A “music rights organization” is an association, corporation, or other entity that is authorized by a copyright owner to license the public performance of nondramatic musical works.’

(b) Section 114 of Title 17, United States Code, is amended by:

(i) replacing the term “performing rights society” with “music rights organization” in clause (d)(3)(C).

(ii) amending clause (d)(3)(E) to read in its entirety:

‘(E) For purposes of this paragraph, a “licensor” shall include the licensing entity and any other entity under any material degree of common ownership, management, or control that owns copyrights in sound recordings.’

(c) Section 513 of Title 17, United States Code, is amended by replacing the term “performing rights society” with “music rights organization”.

SEC. 3. REPEAL OF COMPULSORY MECHANICAL COPYRIGHT LICENSE FOR NONDRAMATIC MUSICAL WORKS.

Section 115 of title 17, United States Code, is amended to read as follows:

‘Sec. 115. Scope of exclusive rights in nondramatic musical works: Licensing of reproduction, distribution and public performance rights

‘In the case of nondramatic musical works, the exclusive rights provided by clauses (1), (3) and (4) of section 106, to make phonorecords of such works, to distribute phonorecords of such works and to perform such works publicly, are subject to the conditions specified by this section.

‘(a) Licensing of reproduction and distribution rights by music rights organizations. — (1) A lawful authorization to a music rights organization to license the right to perform a nondramatic musical work includes the authorization to license the non-exclusive right to reproduce the work in phonorecords and the right to distribute phonorecords of the work to the public.

‘(2) A license from a music rights organization to perform one or more nondramatic musical works publicly by means of digital audio transmissions includes the non-exclusive right to reproduce the work in phonorecords and the right to distribute phonorecords of the work to the public, to the extent that the exercise of such rights facilitates the public performance of the musical work. A music rights organization that offers a license to perform one or more nondramatic musical works publicly by means of digital audio transmissions shall offer licensees use of all musical works in its repertoire, but the music rights organization and a licensee may agree to a license for less than all of the works in the music rights organization’s repertoire.

‘(3) No person shall authorize more than one music rights organization at a time to license rights to a particular nondramatic musical work.

‘(4) A music rights organization may recover, for itself or on behalf of a copyright owner, statutory damages for copyright infringement only if such music rights organization has made publicly available a list of the nondramatic musical works for which it has been granted the authority to grant licenses, and such list included the infringed work at the time the infringement commenced.

‘(5) The rights and obligations of this subsection shall apply notwithstanding the antitrust laws or any judicial order which, in applying the antitrust laws to any entity including a music rights organization, would otherwise prohibit any licensing activity contemplated by this subsection.

‘(b) Other Licensing Agents. — Notwithstanding any authorization a music rights organization may have to license nondramatic musical works, a copyright owner of a nondramatic musical work may authorize, on a non-exclusive basis, any other person or entity to license the non-exclusive right to make and distribute phonorecords of such work in a tangible medium of expression but not by means of a digital audio transmission.

‘(c) Direct Licensing by a Copyright Owner — Nothing in this section shall prohibit the direct licensing of a nondramatic musical work by its copyright owner on whatever rates and terms to which it agrees.

‘(d) Definition. - As used in this section, the following term has the following meaning: A “digital audio transmission” is a digital transmission, as defined in section 101, of a phonorecord or performance of a nondramatic musical work. This term does not include the transmission of a copy or performance of any audiovisual work.’
SEC. 4. EFFECTIVE DATE.

This Act shall become effective on ______________.
SEC. 5. EXISTING LICENSES.

(a) Any license existing as of [effective date] between a copyright owner of a nondramatic musical work or its agent and a licensee with respect to the right to make and distribute phonorecords of such work shall expire according to its terms or on [effective date plus 1 year], whichever is earlier.

(b) Any licensee that has made phonorecords of nondramatic musical works prior to [effective date] pursuant to the compulsory license then set forth in section 115 of this title may distribute such phonorecords prior to [effective date plus 1 year] according to the terms of the compulsory license existing prior to its repeal.

[Other conforming amendments to address other references in title 17 to section 115 will be necessary.]