One current intellectual property debate is whether or not radio broadcasters should be required to license the music they play over the air. In other words, to pay for it.
Broadcasters don’t currently have to license the music they play because U.S. copyright law does not recognize a “performance right” for broadcasts.
The lack of a performance right is an anomaly in U.S. copyright law, and when compared to most other countries. But broadcasters here have been getting their music for free for a long time. With music industry revenues plummeting, the recording industry is increasingly sensitive about the gap in U.S. law and in their revenue stream.
In intellectual property policy debates, the best solutions support property rights, market forces, and technology neutrality. The lack of a performance right violates all three principles. It undercuts neutrality because, while other media must negotiate such rights, over-the-air broadcasters are exempt. It negates property rights because the property owner may not even try to negotiate with the broadcast user. And it undercuts market forces because markets can’t begin to work until property rights are recognized.
Given the vast library of music needed, negotiating licenses for performance rights is quite cumbersome for a broadcaster. Moreover, broadcasters invest in the business relying on the rule that such negotiations are not required. But from the standpoint of the recording studios, there is no reason for broadcasters to be exempted from the rules that apply to other media, especially now that it is so difficult to enforce copyrights that recording studios are often not paid for copies made by the downstream audience.
So, is licensing practicable? In the case of performance rights for sound recordings, some have argued that, because recording studios benefit from the broadcast of their music, the benefits are essentially a “wash,” such that neither should have to pay the other. That may be true, but that is for the market to decide, not government. The answer might be sometimes yes, and sometimes no. Because both sides benefit from making an exchange, there is no reason that negotiations would ordinarily fail.
Even with all the challenges, exempting broadcasters from the performance right is not the solution. Solutions could include encouraging clearinghouses and umbrella licensing societies, or reforms that address fragmentation – all better than stripping away property rights.
So far, basic market-friendly arguments weigh in favor of requiring over-the-air broadcasters to pay for performance rights in sound recordings, but suddenly changing the rules would not be entirely fair to broadcasters either. A few guidelines:
- Avoid applying the change retroactively.
- Exempt sound recordings issued before a certain date.
- Grandfather broadcasters, perhaps those licensed before the date when performance rights for broadcasts began to be discussed seriously. Broadcasters licensed before then arguably could rely on the old policy, at least until their licenses came up for renewal.
- Or, the right might be recognized only when a user-friendly licensing mechanism is operating the satisfaction of an outside authority such as an arbitrator, or by a certain date, whichever is sooner (to avoid foot-dragging).
The last three are second-best options. As a rule businesses should be wary of relying on special legal status and privileges in an age of media convergence. But if markets can be restored, a transition of years might be easier to accept than an instant switch.
There is no good reason not to extend performance rights to sound recordings played over the airwaves. Doing so would be an important step towards setting music markets on sounder footing going forward.