Neither the MGM v. Grokster ruling nor the 12,000+ lawsuits filed against individuals will succeed in solving the P2P problem: getting artists fairly compensated for filesharing. EFF advocates collective licensing as a better solution for the P2P dilemma, a solution that aligns the incentives of copyright owners with, rather than against, the growth of the Internet.

We may have found a new ally in Marybeth Peters, Register of Copyrights. Frustrated by the difficulties in clearing music for online digital distribution, the Register has proposed legislation that would abolish the so-called compulsory "mechanical" license and replace it with a system designed to enable collecting societies (like BMI, ASCAP, and SESAC) to provide "one-stop" licensing for digital rights. This proposal is controversial, prompting debate in the blogosphere and a hearing on July 12th before the Senate Intellectual Property subcommittee.

To understand why this is such a major development, you have to know a little about the Byzantine world of music licensing. When it comes to licensing recorded music for use online, you have to license both the sound recording copyright and the musical composition copyright (the underlying musical notes and lyrics) for each song. As if that weren't complicated enough, different entities hold different parts of the composition right. As the Register pointed out, to make a single online use of a single musical composition, potential licensors often have to pay for "two separate licenses from two separate sources." What's more, locating the composition's copyright holder to secure the license can be exceedingly difficult.

The Register's proposal attempts to ease the burden in licensing compositions. The proposed legislation would (hopefully) push (but not force) the composition rights holders to consolidate all of their relevant digital music rights into voluntarily formed collecting societies (known as "music rights organizations," or MROs), which would then be able to grant blanket licenses for online uses, such as downloads, on-demand streaming, and podcasting.

Perhaps most importantly, these MROs would have the power to grant blanket licenses to individual P2P file-sharers, just as envisioned in EFF's white paper, A Better Way Forward.

This is an important step in the right direction, creating the prerequisites for a real, market-based solution to the P2P dilemma. Of course, it will still be up to the record labels (which own the copyrights in the sound recordings) to join the MROs or create their own collecting societies to license P2P users directly, but the MRO example, if successful, may provide just the push that the record industry needs. At a minimum, this reform should accelerate the licensing of digital music services and novel online uses, like podcasting, that should not be held hostage to internecine squabbles between middlemen, all of whom claim to represent the same rights holders.

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