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Napster Goes Before US Congress
cecil36 writes "Yahoo! is reporting that Napster is going through a congressional hearing. At the Senate Judiciary Committee hearing were Hank Berry, Napster interim chief, representatives from the recording industry, artists Alanis Morissette and Don Henley, and the MPAA's Jack Valenti. There appears to be support for online compulsory licensing (pay for rights to listen) in both the House and Senate, but Sen. Orrin Hatch (R-UT) is saying that this type of licensing could be in violation of international treaties."
Statutory royalties are already being collected by the music industry. Every time someone purchases a CDR to fill with music downloaded from Napster, they pay a 3% royalty, which is put in a fund. 100% of this fund (minus some 12 cents paid to two individuals who have been fighting the system and demanding their royalties directly) is paid directly to an organization called Copyright Management Inc (CMI), which distributes the fund to copyright holders, songwriters, music publishers, and artists. Well, they distribute the funds to the various organizations that claim to represent those parties, such as ASCAP, BMI, etc. In the words of the copyright office:
The Settling Parties [which received 99.999% of the funds] receive all remaining royalty fees because they represent the interests of the remaining copyright owners entitled to receive a portion of these funds.
These "royalties", collected by law, are intended to compensate the music industry for all non-commercial copying of music. These royalties have been collected since 1992, and represent a substantial amount of money. These royalties are compounding by the year as more and more people purchase CDR burners, and blank media, and use them.
It turns out to be fairly difficult to find out exactly how much money has been collected in blank media royalties. here is the copyright office's website describing how the royalties were divided up. The acronym is DART, for "Digital Audio Recording Technology" If you look over the documents, you'll find that for every year that blank media statutory royalties have been collected, over 99.99% have gone to an organization called "Copyright Management Inc", which is a blanket organization that covers ASCAP, BMI, SESAC, HFA, SGA, and others. It's almost as if they don't really want the public to know how much money is being collected. No matter how hard you look, you'll never find actual dollar amounts -- only percentages. I was able to find out the actual dollar amounts though, from one of those two individuals who filed individual claims, and here they are:
Royalties collected on consumer digital audio recording devices and blank media:
1992 $118,228.42
1993 $520,162.84
1994 $521,999.64
1995 $473,592.20
1996 $397,152.52
1997 $969,178.06
1998 $1,978,457.93
1999 $3,551,030.86
2000 $5,285,246.32
Total: over 13 Million dollars so far.
The royalties collected prior to 1997 mostly represent sales of DAT recorders and tapes. The introduction of CD recorders and blank CDRs caused a large jump in the collected royalties, and surely the introduction of Napster is largely responsible for the enormous growth in royalties collected in 1999 and 2000.
In other words, people are buying enormous numbers of blank CDRs. Most of these CDRs are probably being filled with music. Much of that music probably comes from Napster. So Napster is directly fueling the growth of the DART fund, which, I will remind you, is, by law, paid to artists and songwriters as well as copyright holders. So next time someone says that Napster users don't pay for their music, you have the real answer. They are. Congress needs to be made aware of this 13 million dollars in royalties, and decide what rights are purchased by those "royalties." Either admit that Napster users are paying royalties when they burn their downloaded MP3s to CDRs, and allow Napster to continue, or establish a new statutory royalty system based on downloads, and scrap the royalty system based on blank media, because under the current system, the people pay royalties to the music industry on the one hand when they purchase their media, yet are told that they are not paying the music industry when they fill that media. The music industry is talking out of both sides of their mouth on this issue, and no one seems to want to call them on it.
When asked when music publishers might actually distribute songs on the Internet, Jack Valenti and Hilary Rosen responded, "Real Soon Now." When pressed how this might be expidited, they elaborated, "Well, we're shipping tons of ice to Napster, so when they go to Hell everything will freeze over faster."
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