Fair Play Fair Pay Act is not what it seems

The recently introduced Fair Play Fair Pay Act (H.R. 1836) covers several topics in the area of music licensing, but does so in a manner which — despite its cleverly worded title — is far from equitable.

Take, for example, the bill’s proposal to expand the scope of performance rights to include terrestrial transmissions carried out by AM/FM radio stations. Supporters of this provision justify this proposed change in law on the basis that Internet radio services currently compensate record labels for their use of sound recordings. They argue that it should require traditional broadcasters to make similar payments.

{mosads}At first glance, this line of reasoning might appear reasonable. However, on closer inspection one quickly realizes that the legislation fails to extend the same royalty caps it proposes to offer fledgling radio stations to small- or medium-sized webcasters.  If the bill’s primary goal is to achieve greater parity, then any newly established rules should apply across all competing radio platforms on a non-discriminatory basis.

Nor can it be said that the bill’s treatment of pre-72 sound recordings is entirely fair.

Slightly more than four decades ago, when Congress first decided to extend copyright protection to sound recordings, it made the conscious decision not to protect recordings published prior to 1972. The thinking at the time was that there wouldn’t be much of a market for older recordings, so there wasn’t a need to provide them with federal protection.

The advent of online music services, however, changed all of that, by breathing new life into many forgotten treasures. It has also encouraged Congress to revisit its prior decision. The only problem with its new approach is the remedy embodied in the Fair Play legislation eschews an even-handed solution, in favor of one that caters to a very narrow set of interests.

At the conclusion of its 2011 study into the treatment of pre-72 sound recordings, the U.S. Copyright Office recommended that such recordings be fully incorporated into existing federal copyright law.

Full incorporation would provide copyright owners with the ability to control digital performances, copyright users with important limitations and exceptions and place older recording artists on an equal footing with newer artists with respect to their ability to terminate unattractive contracts entered into with various record labels several decades ago. Unfortunately, the Fair Play legislation charts an entirely different path.

The bill’s exclusive focus on increasing the current royalty obligations of music licensees comes at an interesting time. Just last week, the recording industry reported that it had experienced its first double-digit growth in annual revenues in nearly two decades, and attributed its financial success to the considerable upsurge in online streaming. Indeed, the report went on to note how in just five short years, online music streaming has grown from less than 10 percent of industry revenues to account for more than 50 percent of total revenue.

The recent prosperity of the record labels doesn’t have to be a one-time experience, nor does it have to be limited to one facet of the music industry. It could undoubtedly be replicated throughout other segments of the industry — including music publishing — provided Congress takes the time to develop truly comprehensive legislative solutions that would make it easier to locate, identify and license copyrighted works for purposes of legitimate online distribution.

Not only would such an approach be more prudent. It unquestionably would be much fairer.

Gregory Alan Barnes currently serves as general counsel to the Digital Media Association (DiMA). He holds a master’s degree in public policy degree from Harvard University, a Juris Doctorate from Washington University School of Law and a Bachelor of Arts from Morehouse College. 

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