Hearing on Section 115

Update, June 6, 2006: A draft bill to reform Section 115 would do serious damage to fair use – take action now to stop this dangerous proposal!
Today (March 11), the House Judiciary Committee’s Subcommittee on Courts, the Internet, and Intellectual Property held a hearing on “Section 115 of the Copyright Act: In Need of Update?” (View Webcast). Section 115 is the compulsory license for making and distributing phonorecords and a thorny issue for digital music services. Testimony was given by:

DiMA‘s Jonathan Potter – arguing that mechanical licensing process is insufficient on several levels. Section 115 licensing is inefficient, with complicated notification requirements, an incomplete database of music, per-work penny-rate rather than percentage of revenue fees. He suggests changes on all levels. It is unclear whether streaming services and servier copies require mechanical licenses, and whether the latter as well as tethered downloads fall under the compulsory. Potter suggests that streams should be treated as performances, downloads as copying for distribution with temporary or incidental copies included with in the compulsory fee. He considers the Harry Fox Agency insufficient, as it only represents 60-65% of musicians; he also criticizes the Agency for demanding mechanical licenses for uses beyond download services and for a lack of transparency and fairness in its licensing practices. Finally, he suggests turning section 115 into a blanket license, with similar records and payment procedures as with ASCAP, BMI, and Soundexchange. (See also Potter’s speech at the Digital Music Forum).Register of Copyrights Marybeth Peters – described many of the same issues. She notes that the Copyfight Office is going to consider several proposals to streamline the compulsory licensing process. While she didn’t argue for any particular policy option, she outlined the different directions that could be taken. She also reaffirmed her previous argument that incidental copying for streaming is fair use, or at least should be treated in parallel as such copying for sound recordings.

National Music Publishers Association’s Carey Ramos – argued that there is no need for legislative change, pointing to the recent success of iTunes and related services. Ramos disagreed with Peters’ assessment of incidental copying. He also noted that mechanical royalties were needed in addition to performance royalties to make up for displaced record sales, and that the line between temporary and permanent copies might be difficult to assess.

RIAA’s Cary Sherman – argued that section 115 is deficient and may need to be changed, but hopeful that some problems could be resolved by the relevant industry parties. He mainly focused on impediments to dual-session CDs, licensing artists not working through the Harry Fox Agency, and the per-work penny-rate fees. He also lauded the subscription service agreement reached with Harry Fox in 2001, which Potter extensively criticized.

It’s amazing that this is the same law that came in response to player pianos and functions as a compulsory covers license. Hurray for copyright law’s complexities.