Ok, my soon-to-be copyright gurus, we’re half way through our riveting discussion of the separate rights that come with each copyright! Today’s amazing break down covers a right that is fairly new to the Copyright Act: the right to public performance via digital transmission.
Though a newer addition to our law, since this new rights initial inception into the Act in the 1990’s, it has been the subject of constant debate. The most memorable recent debate is one most of the public is actually familiar with; the settlement between webcasters and the RIAA. Just in case you’re not into reading Congressional rulings, here’s the skinny: fees for public performance were wiping out webcasters left and right, basically making it impossible for them to exist profitably as a business. This was because, before the settlement, a webcaster had to pay a fee each time a song was played, and for each user that was playing it. Although that fee was mere hundredths of a penny, it adds up FAST. Let’s do a quick math problem: 15 songs per hour (approx 4 minutes/song), and let’s say 100,000 people are listening to a webcasted station at a given moment. I can’t remember the exact old fee, but let’s say it is .007 cents. That’s a whopping $10,500 PER HOUR for a webcaster!! Hell, even if I completely off and it is $1,500, that’s still astronomical. According to this article, under the old fee arrangement, even giants like Pandora were sending about 75% of their revenue straight out the door for this licensing fee. And to add insult to injury, we’ve officially approached a time in history where no one wants to pay anything for music, leaving webcasters to rely solely on advertising income to stay afloat. The system was clearly broken.
Luckily, after years of negotiation, a settlement was reached. I won’t get into the nitty gritty of the exact figures (truth be told, I’m having a bit of trouble finding them online), but the fees are now structured around a percentage of revenues that increases with revenue size (i.e. Pandora pays more than your local radio station that simultaneously webcasts). Also, content providers should not that subscription stations have different rates – in fact, there are quite a few different rates based on the type of digital broadcast you’re providing. I would highly recommend spending some time on Sound Exchange, particularly in the FAQ (for both content providers and content owners) and in the Service Provider and Owner sections, respectively.
Besides the fees themselves, the most important thing to ask is: Who is getting paid? Well, this particular right belongs to the owners of sound recordings – not the owners of the songs themselves, who get paid under the Public Performance Rights that we discussed last time. Thus, it’s mostly record labels that are seeing the benefit of this moolah, although there are some artists that have retained the rights to their sound recordings, particularly in the hip hop industry. Sound Exchange is basically the “PRO” of sound recordings; much like ASCAP, BMI and SESAC oversee payment directly to publishers and songwriters, so Sound Exchange oversees the payment of royalties to the owners of sound recordings.
PLEASE NOTE: if you are an artist and your own your own recordings (most likely where you are NOT signed to a label), you should register with Sound Exchange here. Much like the PROs, Sound Exchange has a complex system for tracking plays of recordings and may have money for you!! So get on the ball, people.
As a final note, I would like to briefly address the Performance Rights Act, which would essentially extend the “digital” rights to terrestrial radio… aka “regular” radio. It is currently stalled up Capital Hill. You may have heard some PSAs (Public Service Announcements) regarding this possible amendment, which essentially threaten to start charging people for radio and incorrectly label it a “tax” on radio. I am not taking an official position on this, but you should note two bias things here: 1) these commercials were paid for by the broadcast industry, who are the direct targets of these new proposed fees; 2) the original proposal regarding payment on sound recordings was meant to encompass both analogue and digital broadcasts, but as a result of a tremendous lobbying effort by the broadcasters, it was limited to “digital” transmissions. On the flip side of the coin, here is an article opposing the Act, and some perfectly logical reason supporting the proposition.
So there’s your crash course in digital transmissions. Hopefully I’ll be able to button it all up real nice for you later this week when we round out with the last two rights: public display and derivative works. As always, please feel free to email me directly @ shannon@newleaflegal.com
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