That's the response I posted in a thread further up. However, I don't see the recording industry as a whole, esp. larger record labels, so readily adapting to an entirely request-driven promotional distribution system.
DRM with copy controls (in the case of digital music deliverables) or even some limited-lifetime variant of the common CD (for physical phonorecord deliverables) would be both more cost-effective and easier to control.
Good point, but then this begs the question: What if a record company sends out promotional CDs using a radio station or nightclub contact address that is specifically designated "for promotional materials" to be sent. Would that not constitute a solicitation by the recipient, and hence this ruling would not apply?
Then we shouldn't be surprised if record companies begin enforcing these "no resale" conditions by instead exploiting some provision of U.S. copyright law to thereby prevent the unauthorised redistribution or resale of promotional phonorecords (such as the anti-circumvention of copy controls).
There is already technical solution. It's called DRM, and perhaps some future incarnation of copy-protection could prove effective. The record companies could just as easily contrive a means to limit playback of the CD-DA format to prevent any "unauthorized resale or distribution" of their promotional phonorecords (for example a reflective layer that breaks down after a certain frequency of playback).
The U.S. Copyright Act prohibits circumventing DRM with very few exceptions. Therefore any promotional phonorecords using such a device would have a limited use that is protected by law.
Yes, but the question really is what are you actually giving away. There are much broader implications at stake that I don't believe the ruling exactly clarified.
Are you giving just a physical phonorecord away? Are you giving away the copyright to the sound recording contained on the phonorecord? Are you giving away the copyright to the musical composition embodied within the sound recording?
I would assert that the "gift clause" applies to the entirety of the items being received including the intellectual property contained therein. After all, who exactly decides what aspects of the items constitute an exchange of ownership and which aspects do not.
Copyright is automatic in the United States. The moment you create an original work, you acquire various exclusive rights. But this ruling has determined that unsoclitied promotional CDs do not qualify for the "doctrine of first sale" nor do they remain the property of the record company.
This brings into question whether the rights in the sound recordings and musical works themselves are not also transfered upon receipt. After all, we've just argued that contracts attached to gifts are unenforceable, and that includes copyrigth notices, correct?
If this is true, then one can mail people stolen property in order for them to freely attain legal ownership in the stolen property. After all, the instant the recipient opens the stolen merchandise, because it was delivered unsolicited, the merchandise acquires the legal status of "gift" and is rightfully the recipient's property to do with as he pleases thanks to an oddity in the Postal Reorganization Act which grants consumers full ownership in any unsolicited mail received.
Is a contract even necessary? Merely requesting a promotional CD means that it is no longer being sent "unsolicited." Therefore, you as the promoter are not entitled to protection under the Postal Reorganization Act. Further, a reasonable legal notice attached stating that no transfer of ownership is taking place would likely be an enforceable contract in and of itself.
So let me see if I understand the logic correctly.
If I have a coworker who enjoys watching movies, and I graciously loan him some DVDs that I've rented from the local Blockbuster store -- including a legal notice attached that they are only on loan and that no transfer of ownership is taking place because they are on rental from Blockbuster -- then he suddenly has the legal right to resell those DVDs on eBay because they automatically assume the status of a "gift" because he hadn't actually solicited them from me.
It's a bit circuitous, but I think I shall test this theory out as an easy way to acquire property that actually belongs to others by having them loan it to me without my asking. There is no wrongdoing after all, because the lender (my friend) gave it to me unsolicited with the understanding it would be returned. And the recipient (me) is protected by a legal doctrine that apparently nullifies contracts attached to unsolicited gifts.
A coalition of small Webcasters, in cooperation with several digital music services including Live365 and SWCast Network, yesterday morning announced their intent to form a U.S. trade association.
The official news release even made it to the front page of Billboard Publicity Wire.
Let's hope that it's not to late to effect some change in this whole ordeal. There is still the possibility of an appeal by NPR, DiMA, et al, but I'm placing my bets on Congressional intervention. It's our best hope at this juncture.
Actually there is an alternative to SoundExchange. Royalty Logic also distributes royalties to record producers and recording artists. However, they do not execute license agreements, from what I understand.
Therefore, the real issue is that SE was selected as the sole designated agent to collect all royalties from digital music services operating under the statutory license -- which in essence created a monopoly. (Can we say antitrust consent decree waiting to happen?)
That is why I would like to see a shift away from the broken regulatory model of licensing and toward independent licensing collectives (a la ASCAP and BMI). Let the free market sort these issues out instead. We need to promote increased competition in the world of digital broadcast licensing.
How do you enforce that? How can you prevent Americans from tuning into an internet resource? If this is true I think it could be shot down fairly easily.
The Webcaster would still be liable for copyright infringement in the United States. Authoritative enforcement is not a prerequisite for a civil suit to be filed (in this case, by the record labels).
I really think a loophole could be found in this formula. For instance, what if you uploaded all the music to the offshore stream host? Then the performance would originate from that country.
The public performance right is implicated at the time and place of the reception (not the origin) of a digital broadcast transmission of sound-recordings. This is a legal precedent recognized by virtually all countries that are affiliated with the International Federation of the Phonographic Industry (which there are about fifty if I recall).
Good question. However, the exclusive digital performance right applies to all sound-recordings -- regardless of the label's affiliation with the RIAA. Also there is not currently any compulsory license in place for podcasting of sound-recordings (Section 114 applies to non-interactive Webcasts, not downloads).
So in both cases it would be necessary to negotiate this clearance (performance right and master-recording right) with every separate record label -- and that can be a very time consuming process. It is also not by any means guaranteed.
Altogether, direct licensing can pose many legal hurdles for small Webcasters with limited resources.
Unless Last.fm has negotiated a license agreement with SoundExchange, they are no more entitled to transmit their streams into the United States than any U.S.-based Webcaster. From what I understand, Last.fm, has thus far obtained clearance from several record labels, but that may not completely absolve them of their royalty obligations for the remainder of the sound-recordings being transmitted into the United States (which PPL alone cannot authorize).
Very well put. This does appear to be an issue of "control" yet again for the recording industry. The end result will be limited options for music consumers and a constricted revenue stream for producers and performers as hundreds of legitimate Net radio services are forced offline or underground (i.e. pirate).
No. A royalty obligation to SoundExchange still exists so long as any listeners are based in the United States. Performance licensing of sound-recordings is dependent on where the performance itself takes place -- not the location of the streaming server.
A group of small commercial and noncommercial Webcasters are already banding together to launch a national trade association in response to the latest miscarriage of justice. Hopefully this means the possibility of striking a separate agreement with SoundExchange, like back in 2002.
As I always say -- Long live independent online radio!
The DMCA itself is in dire need of reform. Lawmakers need to recognize that the Act has numerous technical deficiencies and contradictions which create unnecessary burdens for Webcasters. And these corrections must occur before "raising the roof" on royalty rates for Webcasters.
The following are just a few examples of activies that are commonplace to Webcasting that finally need to be properly codified.
Legally you cannot mix, crossfade, or even voiceover the music within a Webcast because doing so violates the adaptation right in the sound-recording.
Legally you cannot circumvent DRM in the music that you intend to Webcast, even though a compulsory license is supposed to predominate a copyright holder's control in their work.
Legally you cannot create CDR backups of the music that you intend to Webcast because that violates the reproduction right in the sound-recording.
Legally you cannot pre-record entire music programs for use in a Webcast because that is a violation of the reproduction right in the sound-recording.
Legally you cannot syndicate a music program across multiple Webcasts because that is a violation of the reproduction right and the distribution right in the sound-recording.
Of course the greatest shortcoming of the statutory Webcaster license, is that all transmissions are limited to the United States. It is imperative that SoundExchange finally renews its IFPI International Webcaster Agreement. We are one of the few remaining first-world nations that still does not recognize the global scope of Internet radio. Australia, Germany, France, Mexico, the United Kingdom, and numerous other countries are already onboard with the program. Where is the United States?
Furthmore, SoundExchange does not even bother to police Webcasters for compliance. Apparently they feel their only purpose is to be a designated collecting body -- not a performing-rights society. After all, the latter would imply that the intent of SoundExchange is to actually protect the interests of its members a la ASCAP and BMI. Meanwhile, the pirate Webcasting community will survive this latest rate-surge with few (if any) grievances. As for the majority of legitimate online radio stations, they will be forced into oblivion.
For these and other reasons, I can say with great confidence that these higher royalty rates are not justified for our industry.
Thanks. I'm still juggling between this new CRB ruling and the SWSA which wasn't a per-performance fee. It's hard to get used to something which I was so glad to avoid all these years.
Intriguing. But isn't that counterproductive? A compulsory license is intended to relieve the users of artistic works (i.e. Webcasters in this case) from the inconvenience of direct negotations. By securing a blanket license under statute, there is no longer any need to negotiate royalties with separate copyright holders. In fact to do so would be quite harmful -- since it would involve paying twice for the exact same public performance.
The recording industry argues that Webcasting is not yet an effective promotional medium for their material. Also, SoundExchange DID propose a revenue-based model -- which at least favoured smaller businesses. However, the CRB judges declined to accept that proposal and opted for the "pay per play" rates.
So the negative outcome of this ruling is not entirely the fault of the recording industry.
"This is tedious and time consuming, but still economically better than paying under the statutory license."
Keep in mind that route is by no means guaranteed either. The advantage of the compulsory license is that it grants an exemption to a copyright holder's exclusive control over all related rights in the work. The copyright holder can easily say no to any direct negotiations.
That's correct. All musical works and sound recordings are protected under U.S. copyright law. They don't need to be signed to a publisher and a record-label. It's known as an automatic right.
Slashdot Mirror
That's the response I posted in a thread further up. However, I don't see the recording industry as a whole, esp. larger record labels, so readily adapting to an entirely request-driven promotional distribution system.
DRM with copy controls (in the case of digital music deliverables) or even some limited-lifetime variant of the common CD (for physical phonorecord deliverables) would be both more cost-effective and easier to control.
--Randall
Good point, but then this begs the question: What if a record company sends out promotional CDs using a radio station or nightclub contact address that is specifically designated "for promotional materials" to be sent. Would that not constitute a solicitation by the recipient, and hence this ruling would not apply?
--Randall
Then we shouldn't be surprised if record companies begin enforcing these "no resale" conditions by instead exploiting some provision of U.S. copyright law to thereby prevent the unauthorised redistribution or resale of promotional phonorecords (such as the anti-circumvention of copy controls).
--Randall
There is already technical solution. It's called DRM, and perhaps some future incarnation of copy-protection could prove effective. The record companies could just as easily contrive a means to limit playback of the CD-DA format to prevent any "unauthorized resale or distribution" of their promotional phonorecords (for example a reflective layer that breaks down after a certain frequency of playback).
The U.S. Copyright Act prohibits circumventing DRM with very few exceptions. Therefore any promotional phonorecords using such a device would have a limited use that is protected by law.
--Randall
Yes, but the question really is what are you actually giving away. There are much broader implications at stake that I don't believe the ruling exactly clarified.
Are you giving just a physical phonorecord away? Are you giving away the copyright to the sound recording contained on the phonorecord? Are you giving away the copyright to the musical composition embodied within the sound recording?
I would assert that the "gift clause" applies to the entirety of the items being received including the intellectual property contained therein. After all, who exactly decides what aspects of the items constitute an exchange of ownership and which aspects do not.
Copyright is automatic in the United States. The moment you create an original work, you acquire various exclusive rights. But this ruling has determined that unsoclitied promotional CDs do not qualify for the "doctrine of first sale" nor do they remain the property of the record company.
This brings into question whether the rights in the sound recordings and musical works themselves are not also transfered upon receipt. After all, we've just argued that contracts attached to gifts are unenforceable, and that includes copyrigth notices, correct?
--Randall
If this is true, then one can mail people stolen property in order for them to freely attain legal ownership in the stolen property. After all, the instant the recipient opens the stolen merchandise, because it was delivered unsolicited, the merchandise acquires the legal status of "gift" and is rightfully the recipient's property to do with as he pleases thanks to an oddity in the Postal Reorganization Act which grants consumers full ownership in any unsolicited mail received.
--Randall
Is a contract even necessary? Merely requesting a promotional CD means that it is no longer being sent "unsolicited." Therefore, you as the promoter are not entitled to protection under the Postal Reorganization Act. Further, a reasonable legal notice attached stating that no transfer of ownership is taking place would likely be an enforceable contract in and of itself.
--Randall
So let me see if I understand the logic correctly.
If I have a coworker who enjoys watching movies, and I graciously loan him some DVDs that I've rented from the local Blockbuster store -- including a legal notice attached that they are only on loan and that no transfer of ownership is taking place because they are on rental from Blockbuster -- then he suddenly has the legal right to resell those DVDs on eBay because they automatically assume the status of a "gift" because he hadn't actually solicited them from me.
It's a bit circuitous, but I think I shall test this theory out as an easy way to acquire property that actually belongs to others by having them loan it to me without my asking. There is no wrongdoing after all, because the lender (my friend) gave it to me unsolicited with the understanding it would be returned. And the recipient (me) is protected by a legal doctrine that apparently nullifies contracts attached to unsolicited gifts.
--Randall
I agree. It is correctly Daylight Saving Time.
Checking headlines for accuracy is always a good idea before submitting a story.
A coalition of small Webcasters, in cooperation with several digital music services including Live365 and SWCast Network, yesterday morning announced their intent to form a U.S. trade association.
The official news release even made it to the front page of Billboard Publicity Wire.
Let's hope that it's not to late to effect some change in this whole ordeal. There is still the possibility of an appeal by NPR, DiMA, et al, but I'm placing my bets on Congressional intervention. It's our best hope at this juncture.
Actually there is an alternative to SoundExchange. Royalty Logic also distributes royalties to record producers and recording artists. However, they do not execute license agreements, from what I understand.
Therefore, the real issue is that SE was selected as the sole designated agent to collect all royalties from digital music services operating under the statutory license -- which in essence created a monopoly. (Can we say antitrust consent decree waiting to happen?)
That is why I would like to see a shift away from the broken regulatory model of licensing and toward independent licensing collectives (a la ASCAP and BMI). Let the free market sort these issues out instead. We need to promote increased competition in the world of digital broadcast licensing.
How do you enforce that? How can you prevent Americans from tuning into an internet resource? If this is true I think it could be shot down fairly easily.
The Webcaster would still be liable for copyright infringement in the United States. Authoritative enforcement is not a prerequisite for a civil suit to be filed (in this case, by the record labels).
I really think a loophole could be found in this formula. For instance, what if you uploaded all the music to the offshore stream host? Then the performance would originate from that country.
The public performance right is implicated at the time and place of the reception (not the origin) of a digital broadcast transmission of sound-recordings. This is a legal precedent recognized by virtually all countries that are affiliated with the International Federation of the Phonographic Industry (which there are about fifty if I recall).
Good question. However, the exclusive digital performance right applies to all sound-recordings -- regardless of the label's affiliation with the RIAA. Also there is not currently any compulsory license in place for podcasting of sound-recordings (Section 114 applies to non-interactive Webcasts, not downloads).
So in both cases it would be necessary to negotiate this clearance (performance right and master-recording right) with every separate record label -- and that can be a very time consuming process. It is also not by any means guaranteed.
Altogether, direct licensing can pose many legal hurdles for small Webcasters with limited resources.
Unless Last.fm has negotiated a license agreement with SoundExchange, they are no more entitled to transmit their streams into the United States than any U.S.-based Webcaster. From what I understand, Last.fm, has thus far obtained clearance from several record labels, but that may not completely absolve them of their royalty obligations for the remainder of the sound-recordings being transmitted into the United States (which PPL alone cannot authorize).
Actually small commercial Webcasters previously operated under the SWSA which was exclusively a revenue-based royalty rate.
Very well put. This does appear to be an issue of "control" yet again for the recording industry. The end result will be limited options for music consumers and a constricted revenue stream for producers and performers as hundreds of legitimate Net radio services are forced offline or underground (i.e. pirate).
No. A royalty obligation to SoundExchange still exists so long as any listeners are based in the United States. Performance licensing of sound-recordings is dependent on where the performance itself takes place -- not the location of the streaming server.
A group of small commercial and noncommercial Webcasters are already banding together to launch a national trade association in response to the latest miscarriage of justice. Hopefully this means the possibility of striking a separate agreement with SoundExchange, like back in 2002. As I always say -- Long live independent online radio!
The DMCA itself is in dire need of reform. Lawmakers need to recognize that the Act has numerous technical deficiencies and contradictions which create unnecessary burdens for Webcasters. And these corrections must occur before "raising the roof" on royalty rates for Webcasters.
The following are just a few examples of activies that are commonplace to Webcasting that finally need to be properly codified.
Of course the greatest shortcoming of the statutory Webcaster license, is that all transmissions are limited to the United States. It is imperative that SoundExchange finally renews its IFPI International Webcaster Agreement. We are one of the few remaining first-world nations that still does not recognize the global scope of Internet radio. Australia, Germany, France, Mexico, the United Kingdom, and numerous other countries are already onboard with the program. Where is the United States?
Furthmore, SoundExchange does not even bother to police Webcasters for compliance. Apparently they feel their only purpose is to be a designated collecting body -- not a performing-rights society. After all, the latter would imply that the intent of SoundExchange is to actually protect the interests of its members a la ASCAP and BMI. Meanwhile, the pirate Webcasting community will survive this latest rate-surge with few (if any) grievances. As for the majority of legitimate online radio stations, they will be forced into oblivion.
For these and other reasons, I can say with great confidence that these higher royalty rates are not justified for our industry.
Randall Krause
SWCast Network, Inc.
Thanks. I'm still juggling between this new CRB ruling and the SWSA which wasn't a per-performance fee. It's hard to get used to something which I was so glad to avoid all these years.
Intriguing. But isn't that counterproductive? A compulsory license is intended to relieve the users of artistic works (i.e. Webcasters in this case) from the inconvenience of direct negotations. By securing a blanket license under statute, there is no longer any need to negotiate royalties with separate copyright holders. In fact to do so would be quite harmful -- since it would involve paying twice for the exact same public performance.
The recording industry argues that Webcasting is not yet an effective promotional medium for their material. Also, SoundExchange DID propose a revenue-based model -- which at least favoured smaller businesses. However, the CRB judges declined to accept that proposal and opted for the "pay per play" rates.
So the negative outcome of this ruling is not entirely the fault of the recording industry.
"This is tedious and time consuming, but still economically better than paying under the statutory license."
Keep in mind that route is by no means guaranteed either. The advantage of the compulsory license is that it grants an exemption to a copyright holder's exclusive control over all related rights in the work. The copyright holder can easily say no to any direct negotiations.
That's correct. All musical works and sound recordings are protected under U.S. copyright law. They don't need to be signed to a publisher and a record-label. It's known as an automatic right.