Register of Copyright Proposes Revision to Section 115 Compulsory

Check out Marybeth Peters’ testimony
before the House Subcommitte on Courts, the Internet, and Intellectual
Property.  It includes a draft bill, dubbed the “21st Century
Music Licensing Reform Act,” which would repeal the mechanical compulsory license and alter the roles, rights, and obligations of rights collectives.

As you may recall, several hearings have been held on section 115 in the past.  INDUCE Act blog, Joe Gratz, and Cathy Kirkman
already have posted some thoughts on the Register’s proposal.  I’d
like to say more later, but I haven’t looked at the proposal deeply
enough to comment on its merits.  For now, I just want to point
out the nuance
here in thinking about what it means to let the free market work.

Peters wants to dispose of the compulsory license for numerous reasons,
but particularly because free market negotations would be
preferable.  But she doesn’t view the free market in a wholly simplistic
way, in which efficient outcomes would be reached if only we granted
broad entitlements and got out of rights holders’ way. Rather, in her
she recognizes that carefully structuring and allocating rights can be
crucial to achieving efficiency.

The proposal is aimed at engineering the market to reach a particular outcome.  Its explicit purpose is
“to foster a consolidated licensing structure,” in which music rights
organizations (MROs) would act as a “one-stop shop” for performance,
reproduction, and distribution licenses.  The PROs, which offer
licenses on a  “blanket basis for those who wish to have the
freedom to perform any work within a performing rights organization’s
repertoire,” should act as a model for licensing of
reproduction and distribution rights.  Unlike under the current compulsory license, rights holders would be free to
license their works however they choose and “[n]othing obligates a
copyright owner to utilize a MRO”; however, the law would be designed
such that “the increased efficiency of [the MRO] structure provides an
incentive for them to do so, just as they have all utilized performing
rights organizations.” 

To that end, the proposal
“provides that when a music rights organization has been lawfully
authorized to license the public performance right in a nondramatic
musical work, that music rights organization is also authorized to
license the reproduction and the distribution of phonorecords of such
work, including by digital audio transmissions.” Furthermore, to remedy
conflicts regarding who should get paid for streaming, it “obligates a
music rights organization to offer, as part of its license to perform
publicly a nondramatic musical work by means of a digital audio
transmission, a non-exclusive right to reproduce phonorecords of the
musical work and to distribute phonorecords of that work by means of a
digital audio transmission, to the extent that such reproduction and/or
distribution facilitates the public performance.”