Global Affairs Project

MUSIC COPYRIGHT

Copyright reform or time for a new ideology.

“What if we're all watching the GRAMMYs a few years from now, and there's no Best New Artist award because there aren't enough

talented artists or songwriters who are actually able to make a living from their craft? Could that really happen? Or more importantly, could any of
us ever let that happen?”

Neil Portnow - Recording Academy President/CEO
at the 57th Annual Grammy Awards
A Brief History of US Music Copyright

“To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to to their

respective writings and discoveries.”

- United States Constitution Article I Section 8

Enacted in 1790, this one sentence in the ushered in by the Founding Fathers, gave way to the beginnings of copyright

protection by way of the Constitution of the United States of America. By contrast, it took until 1831 for music
compositions to be granted Federal protection and specifically had to be notarized on music manuscript to take effect. Issues
of infringement did come up in the courts from time to time and may have not have been in favor of the owners of the
copyrights, but the courts did do their best to rule fairly and justly.

Fast-forward to 1909, this is when the Copyright Act was first established and music compositions were granted

protection, but still sound recordings were not included. Individual States did have the power to intervene, through the
application of the Common Law, by making it unlawful to duplicate any sound recording. But by the 1930’s, music pirates
were already circumventing the system by offering acetates of jazz music not readily available in stores and right onto the
1950’s moved boldly by directly competing with big music labels by bootlegging their material and offering it directly in
music stores.

Amazingly, for the first time ever, sound recordings were finally granted Federal copyright protection in the end of

1971, as signed by President Nixon through the Sound Recording Amendment but it only became effective February 15, 1972 and
the rule was not retroactive. Now to illustrate the reasoning for the action, Congress at the time was acting hastily on the fact
that piracy of sound recordings were rampant in the black market. In that year alone, the music industry enjoyed $300
million (USD) in sales and astonishingly, a whole third of those sales in the music market were from unauthorized sales due
to the increasing popularity of vinyl and audio cassettes.

Only a few years later did in 1976, signed under the Ford administration, the Copyright Revision Act was passed. But yet

again, the issue of the pre-1972 recordings was still left unattended only to be protected under the common law jurisdiction
of individual States, and not under the unified umbrella of Federal law. Please be aware that anti-piracy legislation did exist
specifically dealing with any advent of illegal copying or sales of sound recordings of pre-1972 material and bootlegging was
considered a felony.

Let’s continue a bit and jump over to 1994, there lies in the periphery a special treaty signed into effect by the United

States under President Bill Clinton entitled The Trade-Related Aspects of Intellectual Property Rights, which is administered by the
World Trade Organization. I believe by luck alone some existing pre-1972 recordings were granted copyright protection
under Federal law. For some reason it only applied to foreign works that went into the public domain and not any of the
pre-1972 songs made in the United States.

Under the Clinton Administration two very important pieces of legislation concerning copyright were put into effect.

These were the Digital Performance Right in Sound Recordings (1995) and the Digital Millennium Copyright Act (1998) which included
the controversial Safe Harbor provision attached to it.

Surviving the Digital Age

After enjoying years of record setting sales throughout the music industry, the late 90‘s began to see physical sales of

CD’s on the decline. Then came the shocking disruption of 1999 as a new computer program popped up on the internet and
was available as a free download. The global music community was drastically changed overnight and suddenly the global
community changed from a pay culture and morphed into a new belief system of ‘everything should be free’. Owners and
musicians temporarily lost control of their interests in the Copyright of their sound recordings as their recordings were being
shared freely on the internet through a new peer-to-peer (P2P) network called Napster. Immediately this led to many quick
changes as music that was not previous readily available on vinyl or even cassette, due to lack of demand or sheer rarity of
available physical copies, all music was now in fair game and shared in abundance. Lost tapes, bootlegs, live recordings that
were much forgotten about were now available online through peer-to-peer sharing, a lot of the sources of these songs also
came from Compact Disks which made pretty much made perfect duplicate copies of sound recordings, although sometimes
not of the highest quality into just a single file. A firestorm ensued and the major labels declared war on Napster as it was
being blamed for the decreasing music sales from the advent of its opening.

Napster was then sued for copyright infringement(s) by the Recording Industry Association of America, including one

in particular by A&M Records (A&M Records Inc. v Napster Inc.) A&M records lost the overall lawsuit, ended up bankrupt and
even afterwards losing on appeal, arguably speeding up the inevitable. An injunction was ordered by the court which meant
that Napster could no longer allow copyrighted material to be shared through its network any longer which of course lead to
it being considered useless by its users, but it was way too late, the damage was already done.

“Napster hijacked our music without asking. They never sought our permission. Our catalog of music simply became available as free downloads on
the Napster system.”
Lars Ulrich - Metallica

Conflict in the Digital Age

In attempt to shift away from the now instilled belief of free music culture, in 2001, Apple introduced iTunes to the

online World and it was held as the new messiah for the online sale of digital music. Even then iTunes received a bit of push
back by The Beatles owned Apple Records due to a long history of legal issues surrounding trademark rights. On the other
end, Beatport was launched in January 2004 with a roster of 79 labels which was specifically designed to sell audio files to
DJ’s in the Electronic Music community which turn out to be a huge success.

Increasingly, yet again illegal file sharing reared its head into the fray as sales on legitimate online download sites

underwent huge decreases in sales just like in the days of Napster. Sites like Kazaa, Gnutella, Limewire, and other P2P sites
like the Pirate Bay, Kickass.so have been shut down by the US Department of Justice. Remarkably, the United States has
tried to have Megaupload owner and self proclaimed German hacker Kim DotCom, extradited on charges of Criminal
Copyright Infringement which he has successfully challenged, he now resides in New Zealand. It is said that Kim DotCom
has costed the entertainment industry up to $500 Million in lost sales.

Conflict in the Digital Age - Online Streaming
In 2015, there has been a sea-change of behavior in reference to the consumption of music by the average music listener.
Streaming sites like Spotify, Rdio, Soundcloud, etc are now offering music online on-demand. Included in these new
streaming sites, there is an increase in new download sites offering free downloads of copyrighted files on the internet. The
copyright owners of these files cannot exercise their right to sell this material anymore even though sites like iTunes,
Beatport, Amazon, etc have tried to keep download sales alive.

SiriusXM, Pandora and other streaming sites are now in a long standing legal battle over royalties concerning the

playing of pre-1972 recordings that are broadcasted over the internet through their services. A lawsuit brought on by the
Warner Music Group, Sony Music Entertainment and Universal Music Group, who are now the biggest major labels in the
World, seek to acquire monies that they believed that are owed to them. A host of superstar artists including the Turtles, Eric
Burdon, Judy Collins and even Dionne Warwick applaud the action brought forth by the ‘big three’. Think back to the
previous captions about the history of copyright in this report, all of this stems from the fact that pre-1972 recordings do not
enjoy the benefits of Federal copyright protection in the United States, which means they do not receive revenue payments
even though the are streamed online. Believe or not, endeared early recordings from Bob Dylan, Elvis, Motown, George
Gershwin, Bing Crosby, Duke Ellington, The Beatles, Rolling Stones and nearly all recordings post 1923 up to exactly
February 14th, 1972 are included in this epic legal battle.

Underscoring the problem is the fact that today these pre-1972 songs are still only protected by individual States

which are limited to regulating copyright under Common Law. Even worse, each and every State differs in its view of

copyright under separate ideals. States perhaps can look at the governing Federal law under the Copyright Act, but they do not
necessarily have to follow the supremacy of Federal court decisions due to the lower court not being bound by its decisions.
Conflict in the Digital Age - Indies vs Majors

To make matters even worse, Google and its music arm VEVO have been at odd’s with the Independent music

community over the specified terms in their contracts being offered by YouTube Music Key. Some artists have described the
terms of the contract as ‘draconian’ and one particular independent artist by the name of Zoe Keating has actually shared a
legitimate printed conversation of the terms in negotiations between themselves and YTMK. Initially, YTMK was accused
of giving major labels special treatment and unilaterally dictating the terms of contract to Indie artists involved in the new
scheme.

On the other side of the coin, industry heavyweight, Irving Azoff, who controls a plethora of works by respected

artists like John Lennon, George Gershwin, Pharrell and Boston has threatened to pull over 20,000 copyrighted works off
YouTube’s new music service claiming that it has failed to fulfill the appropriate terms of contract to have any the songs
offered.

The Numbers

Adding to the debate is the ultimate question of whether or not the royalty payments from streaming services

are actually worth it. John Legend’s “All of Me” was streamed over 55 million times and only generated $3400 (USD) in
royalties. “Happy” as performed by Pharrell Williams only generated $2700 (USD) even though it was streamed 43 million
times. Zoe Keating, a candid participant in the streaming revolution generated $1764 (USD) through Spotify and curiously
only made $1248 (USD) through roughly 2 million views from her fans on YouTube.

Reforming Copyright in the EU and US

Measures have been put forth by the United States, United Kingdom and the European Union to reform the laws of

copyright in order to address the changes in the digital landscape. Leading the charge in Europe to address the changes in
copyright is Julia Reda of the German Pirate Party. The first issue is the fact that each member state in the European Union
has a different way of dealing with copyright law. For instance, any action taken in one member state may not be allowed in
another member state due to the lack of cohesion of copyright law within the EU. The EU directive on copyright has largely
been failure to legitimately reach consensus on the issue of copyright since their was a lack of participation by important
actors in the earlier drafting of the legislation.

Recently in 2013, the European Union did make some progress by extending the copyright in a sound recording to 70

years. Unlike the law in the United States, European law included recordings released as early as January 1, 1963 which is 9
years greater than its counterpart. Championed by superstar artist Cliff Richard, the law passed with pleasing results as it
was widely known that the copyrights in his own recordings as well as The Beatles and Elvis Presley’s were very close to
expiring in the UK.

Now, as of February 5th, 2015 the US Copyright Office has issued a 245 page report detailing the reforms to

Copyright. Included in the reforms is the direct addressing of the issues concerning pre-1972 sounds recordings and having
them protected under the terms of Federal law effective immediately. Also put forth in the report is the simplification of the
licensing process which will allow owners of the sound recordings more control by allowing them to opt out of certain
interactive services and change the terms of royalty rates by making these services go under a new single market structure. In
the midst of all this, Neil Portnow the President of the Recording Academy, created the Alliance which is now advocating for
proper US copyright reform.

“The definition of insanity is doing the same thing over and over and expecting it to come out different”
- Unknown author

Conclusion

What I am trying to perhaps articulate in detail here in this report, is that there has been a history of reforms to

copyright laws that were nearly always reactionary to the challenges faced by the music industry. Whether by those seeking to
profit through circumventing the language of the law or through the birth of disruptive technologies. One thing is clear,
there is still a huge demand for music and perhaps its time to give the people what they want and how they want it.

Historically, in a rush to remedy the situation, the music industry has positioned itself time and time again by

advocating for tougher reforms concerning copyright. Personally, I am absolutely advocating for the protection of the
pre-1972 recordings as they are part of our musical heritage in North America and Europe. Recordings by incredibly
historical musical movements such as Country, R&B, Soul, Jazz, Doo Wop, the early days of Rock N’ Roll, & Blues, should
be granted protection and the owners of the sound recordings should be properly compensated for their work in order to
keep the machine running.

Perhaps the philosophy of the music industry needs to be changed instead. My point here is that these copyright

reforms that are being advocated for, have been used explicitly to stifle creativity and innovation in the music industry for
quite some time. Artists suing other artist for taking parts of their songs that in turn, are just clogging up the legal system and
are just wasting valuable time. The music industry has turned itself into a self cannibalizing mechanism where creators and/

or content owners are trapped in a perpetual fight over who owns what and what music service should capitulate to their
demands. The system is not perfect, but we can work towards making it better together.

It is time for the music industry to govern itself and loosen its hard grip on copyright, especially among its peers.

“Anyone Seen My Baby” by The Rolling Stones is a prime example of how things should be taken care of as they similarly
did a song performed by KD Lang. They shared their publishing accordingly. The most recent example was Sam Smith’s
“Stay With Me” vs Tommy Petty’s “I Won’t Back Down”, there again they found a way to share the publishing accordingly
and amicably. The fashion industry has reaped the rewards of this ideology and its time that the music industry adopted the
same philosophy. There are new opportunities to collaborate as artists, creators or contributors through the recent
establishment of the Creative Commons.

This is a transnational issue that involves many parts of the World. Music is universal in many aspects and recognize

that the music industry accounts for revenues of over $15 Billion globally from countless sources like live events, subscription
services, downloads, performance rights, and even merchandise.

Music streaming has increased significantly over the past 5 years,
plain and simple. In Europe the music industry no longer needs to
rely on downloads alone as streaming services / music subscriptions
are surely set to take over the market. (Courtesy IFPI Report 2014)

GROSS SALES OF GOODS

LOW IP INDUSTRIES

HIGH IP INDUSTRIES

Some have argued that the music industry needs to lower its control of Intellectual Property, in particular copyright, in order
to reap the benefits. In comparison to its counterparts, it’s hard not to see the obvious point they are making in this
illustration.
(Courtesy of ReadytoShare.org)

Bibliography
A Look At Europe's New Music Copyright Law
http://www.law360.com/articles/492241/a-look-at-europe-s-new-music-copyright-law
Copyright and the Music Marketplace
http://copyright.gov/docs/musiclicensingstudy/copyright-and-the-music-marketplace.pdf
Copyright Issues Relevant to Digital Preservation and Dissemination of Pre-1972 Commercial Sound Recordings by
Libraries and Archives
http://www.wipo.int/tk/en/databases/creative_heritage/museum/link0032.html
Federal Copyright Protection for Pre-1972 Sound Recordings
http://copyright.gov/docs/sound/pre-72-report.pdf
IFPI Digital Music Report 2014
http://www.ifpi.org/downloads/Digital-Music-Report-2014.pdf
Johanna Blakley: Lessons from fashion's free culture
http://www.ted.com/talks/johanna_blakley_lessons_from_fashion_s_free_culture?language=en#t-240574

Protection for Pre-1972 Sound Recordings under State Law and Its Impact on Use by Nonprofit Institutions: A 10-State
Analysis
http://www.loc.gov/rr/record/nrpb/pub146.pdf
The Pirate Party's lone MEP might just fix copyright across the EU
http://www.newstatesman.com/future-proof/2015/01/pirate-partys-lone-mep-might-just-fix-copyright-across-eu