Copyright: locks, levies, lawsuits or licensing? Part 2: levies

I have expanded this discussion to include licensing (Part 4), with this being the obvious option that doesn’t get discussed. Sometimes instead of trying to use locks (part 1), levies or lawsuits (part 3) to enforce a specific business model, that using an alternative licensing mechanism would work better.

I covered the topic of levies before on this blog with an article titled “Analyzing when copyright levies are a good idea, and when they are a very bad idea.“.In this article I spoke about what are called “compulsory licenses”where a copyright holder can no longer require permission for anactivity, but where a royalty fee is imposed. I gave a suggested testfor the extreme situation that warrants such an exception to copyright,and tried to apply this test across a few different proposals (TheSongwriters Association of Canada proposal that I support, and theCreators’ Copyright Coalition proposal which I strongly reject).

We must treat compulsory licensing as an extreme situation, givenremoving the requirement for permission removes the ability of thecopyright holder to use licenses/contracts to enable a wide variety ofbusiness models. The best way to be compensated for creativity changesover time, and only a system which enables innovation in methods ofproduction, distribution and funding can possibly harness the bestways. We need to recognize that there can and must be innovation inbusiness models, not only innovation in the outputs of creativeprocesses. We must not underestimate the damage to the marketplace fromthe government stepping in and imposing a compulsory licensing modelfor uses of copyright where copyright holders are already licensingtheir works.

There is a trend I have noticed in the debate around levies, whichis a radical change in what people believe the purpose of compulsorylicensing is: from dealing with a refusal of copyright holders tolicense their work, to believing it should be a compensation systemwhere copyright users sometimes refuse to pay.

In the past compulsory licensing was only used in situations wherecopyright holders were refusing to license uses of works which wereseen as socially beneficial. The copyright holders didn’t wantcompensation for a use, they wanted to prohibit a use entirely.Possibly the best known example was music composers and theirpublishers when equipment to record music was first invented. Thefollowing quote by composer John Philip Sousa is an example of how offended composers were at the mere existence of audio recording equipment.

“These talking machines are going to ruin the artisticdevelopment of music in this country. When I was a boy…in front ofevery house in the summer evenings, you would find young peopletogether singing the songs of the day or old songs. Today you hearthese infernal machines going night and day. We will not have a vocalcord left. The vocal cord will be eliminated by a process of evolution,as was the tail of man when he came from the ape.”

Many governments felt that recording music was a socially beneficialthing, so created a compulsory licensing system where anyone couldperform and record a performance of music as long as the composer waspaid a government set royalty rate. Some countries still have thissystem in place today, while other countries have removed thecompulsory license given most composers now voluntarily license theirmusic for many uses. Notice that as the market corrected itself, thisextreme measure of the government imposing a single licensing model oncopyright holders was removed — as was done in Canada, which has farfewer compulsory licensing regimes today than we did in the past.

When compulsory licensing is used as a mechanism to compensatecreators where copyright users are refusing to pay, harmful marketdistortions result. This removes business model choices for creators,which for many creators can be as harmful or even more harmful to theirability to make a living than copyright infringement. Using thisjustification for compulsory licensing also removes the incentives ofcopyright holders to move towards workable licensing models, and simplypasses the buck from copyright holders to society as a whole for aproblem which I don’t think can reasonably be placed on averagecitizens.

One of the questions we really have to ask ourselves is whether theproblem is people not being willing to pay, or whether the problem iscopyright holder not being willing to license their works on reasonableterms. Last month I asked “Where is that “buy me now” button for Copyright“,noting that there are many situations where copyright holders have thusfar refused to license their works under reasonable terms.

This situation may be improving. The Songwriters Association of Canadahas a proposal to monetize music file sharing. The idea is simple:rather than trying to use locks or lawsuits to try to stop people fromsharing music online, they would instead license for a reasonable feethat would be paid by those who wish to share music.

There are a variety of licensing mechanisms which I will discuss inmore detail in a future article, but it is important to remember thatthis does not need to be a government imposed compulsory license. Theidea which the songwriters are proposing can be implemented in avariety of ways, including the voluntary collective licensing method proposed by US based Electronic Frontier Foundation (EFF).

What we should avoid is the thinking behind the controversialPrivate Copying regime. The primary proponents of the system, therecording labels, are already opposed to this system. Consumers ofmulti-purpose recording media are upset that they are paying money tothe music industry when they use this media for entirely differentpurposes, and composers and performers are upset at the mechanism usedto distribute the royalties (based on commercial radio airplay andsoundscan CD sales, which are not an appropriate proxy for onlinedistribution statistics).

In the music industry there are 3 different copyright holding groupsthat have their own separate copyright: the composer, the performer andthe “maker” of the recording (the recording label).

While I believe that composers and performers would move to avoluntary licensing system, I’m not so sure about the “makers” whichare often major labels. The rhetoric used by the major labels todescribe filesharing (authorized or not) is not that different (or anymore reasonable) than the initial attitude of composers to theintroduction of the technology that allowed the recording industry toexist in the first place. If given a choice it seems obvious that theserecording labels will refuse to license recordings for online sharinggiven they want to retain tight control over the music industry. Ibelieve that this becomes an obvious example where compulsory licensingmay be necessary, given that this tight control by the increasinglyredundant incumbent recording labels is the source of many of theproblems in the music industry.

Makers are already under more compulsory licensing systems than composers. Section 19 of our current copyright actdescribes a compulsory licensing system that applies to performers andsound recording makers for performance in public (example: playingrecorded music in pubs) or communication to the public bytelecommunication (example: radio).

While I’m not sure if performers need to be lumped together with“makers” at this stage of the marketplace, I do think that extendingthese types of provisions to non-commercial music file sharing makesobvious sense. As with performances in public and the communication bytelecommunication, music composers would be compensated through theirexisting voluntary/extended licensing system.

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