October 23, 2006 | By Derek Slater

RIAA Says Compulsory Licensing Isn't Always So Bad

A Copyright Office ruling last week may lower the price of ringtones, and, interestingly, you have the RIAA and its support for compulsory licensing to thank.

For a record label to distribute a CD or iTunes to sell a downloadable song, they need to secure the rights to the underlying musical composition, which is typically held by a music publisher or the song's composer. The Copyright Act compels composition rights holders to license these types of uses at rates set by Copyright Royalty Judges. At the request of the RIAA, the Copyright Office ruled that this compulsory "mechanical" license also applies to using compositions to create ringtones.

James DeLong asks, "Why was the RIAA, usually staunch in opposition to compulstory licensing, pushing for it in this case? Seems strange."

In fact, it's not so strange -- record labels have defended this compulsory license for decades as a boon to artists, rights holders, and the public.

Consider this quote from a 1967 House report on possible licensing reforms:

"[T]he record producers argued vigorously that the compulsory license system must be retained. They asserted that the record industry is a half-billion-dollar business of great economic importance in the United States and throughout the world; records today are the principal means of disseminating music, and this creates special problems, since performers need unhampered access to musical material on nondiscriminatory terms. Historically, the record producers pointed out, there were no recording rights before 1909 and the 1909 statute adopted the compulsory license as a deliberate anti-monopoly condition on the grant of these rights. They argue that the result has been an outpouring of recorded music, with the public being given lower prices, improved quality, and a greater choice."

Copyright Law Revision, Committee on the Judiciary, 90th Cong. 1st, Sess., Rep. No. 83 66 (March 8, 1967)

In a recent hearing, record labels argued that proposed expansions of the license to new forms of digital delivery were not broad enough. The RIAA similarly defended expansion of the license in comments to the Copyright Office:

"To effectively exempt ringtones from the compulsory licensing regime would allow music publishers to prevent commercialization of sound recordings in the important new mastertone marketplace, as well as to prevent creation and distribution of monophonic and polyphonic ringtones. Such actions would hurt artists, record companies, and digital music services, as well as consumers who are denied access to new musical products. This is not what Section 115 provides or what Congress intended."

In other words, the RIAA argues that extending the compulsory license best serves public policy goals, regardless of the narrow interests of certain copyright holders (publishers) who might want to hold back innovation. Of course, when the shoe is on the other foot, the RIAA is not so quick to embrace compulsory licenses; like the composers who decried the player piano and the compulsory mechanical license in 1909, the major record labels recoil in horror at compulsory licensing of sound recordings for digital and Internet uses. But make no mistake: the RIAA recognizes that a little compulsory licensed "piracy" can get copyright owners and artists appropriately compensated while leaving lots of room for innovation in both new technologies and new distribution channels.

Dragging the government in to set prices should generally be a last resort, and the history of composition licensing also has some lessons to teach about effective, voluntary alternatives. Just as songwriters formed collectives to offer blanket licenses for broadcast radio when it first emerged and disrupted their industry, so too could record labels license P2P file sharing and other novel uses today.

For more on this ruling, check out the Copyright Office's decision, the RIAA's initial and reply briefs as well as the National Music Publishers Association's initial and reply briefs. Bill Patry's blog has more substantive analysis.


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