By Timothy McMahon (Rutgers Law Student)
Currently a trio of acts are making their way through Congress that could forever change copyright law for sound recordings. The Music Modernization Act and the Allocation for Music Producers Act (AMP Act) are aimed at altering mechanical licensing, ASCAP and BMI rate setting, and the procedure on how producers collect royalties operate. The last of the trio, the Compensating Legacy Artists for their Songs, Service, & Important Contributions to Society Act (CLASSICS Act), seeks to do something that music producers and copyright lawyers have wanted for decades, to grant federal copyright protect to pre-1972 sound recordings. Two questions that need to be asked are how will the CLASSICS Act impact these sound recordings and will the it actually pass Congress?
Sound recordings are “works that result from the fixation of a series of musical, spoken, or other sounds but not including sounds accompanying a motion picture or other audiovisual work.” The copyright in a sound recording exists separate and independent of the copyright of the underlying work. Originally sound recordings were protected by a mixture of state statutes and common law. This changed when Congress enacted the Sound Recording Protection Act of 1971 to grant federal copyright protection for sound recordings made after February 15th, 1972. Sound recordings created before this date, pre-1972 sound recordings, were not granted federal copyright protection, however, they were not stripped of their copyrights either. Instead the Act allowed for these pre-1972 sound recordings to remain protected under the current patch work of state laws.
Sound recordings made after February 15, 1972 are governed under the Copyright Act are subject to a compulsory licensing scheme. This compulsory licensing system is put in place to minimize transaction cost associated with finding and negotiating with individual copyright holders. Section 114(d)(1) of the Copyright Act grants terrestrial broadcast radio a license without having to pay to perform the sound recordings. Later, in the Digital Performance Right in Sound Recordings Act of 1995 (DPRA), Congress established a performance right in sound recordings in digital transmission and created a licensing system for digital broadcast radio. Unlike terrestrial radio, digital radio must pay for this license through the SoundExchange. No matter what type of radio station is playing the sound recording, the copyright owner of the underlying work still collects a royalty.
Pre-1972 sound recordings are not governed by the federal regime of copyright law, thus are not subjected to this compulsory licensing scheme. This has created conflicts between radio stations and copyright owners. Theoretically, both terrestrial and internet radio broadcasters would need to find and negotiate the use of each sound recording in order to play it on the radio—this rarely occurs. The amount of settlements and litigation over the violation of pre-1972 sound recordings have increased dramatically and copyright owners are learning the hard way that state copyright laws are inadequate in protecting public performance rights. Some states like Florida and New York have concluded that public performance rights do not exist in sound thereby allowing radio stations to freely broad cast the sound recordings without paying the copyright owner. Even in states where a public performance right exists, radio broadcasters still freely violate them. Pre-1972 sound recording copyright owners are crying out that it is unfair to be treated differently from their federally protected counter parts and has caused them to miss out on revenue they should be entitled to.
How will the CLASSICS Act seek to remedy this problem? The act falls short of fully federalizing these sound recordings, however, it does solve the problem of a lacking uniform licensing scheme for pre-1972 sound recordings. The Act gives pre-1972 sound recordings a public performance right and incorporates them into the current federal licensing scheme—where terrestrial radio broadcasters do not pay royalties and digital radio broadcasters pay royalties. The Act also clarifies that pre-1972 works are protected under the same safe harbors as sound recordings governed under the Copyright Act. Outside of these two changes, the Act leaves intact the state regimes for governing pre-1972 laws. While this act leaves open future problems that can arise by not fully federalizing pre-1972 sound recordings, it would be a major step forward for ensuring economic fairness among copyright owners in pre-1972 sound recordings and clearing up this current legal grey area.
The second question that must be asked is how likely will the CLASSICS Act be passed? Previous attempts and advocacy for pre-1972 sound recordings to be brought into the federal copyright regime have failed to gain traction, however, the current outlook is far better than previous attempts. The cause has gained momentum and the Act has currently been introduced in both the House and the Senate, with support from both parties. In addition, prominent music organizations and 240 prominent artists have been actively campaigning for Congress to pass the Act. With the growing number of lawsuits and cloud of doubt surrounding this area of law, the support for this Act will only continue to grow.
Despite growing awareness and support, there are some reasons that could either delay or defeat the passage of the CLASSICS Act. If Congress does not pass the Act prior to summer recess it will certainly lose momentum in the immediate future. This is because in the fall many members of Congress will be more focused on campaigning then legislating. In addition, two key sponsors of the Act, Representative Issa and Representative Goodlatte, are not seeking re-election and will be leaving Congress. This means that the Act is about to lose two of its major advocates. Also, the Act is expected to face stiff resistance from digital radio broadcasters. Sirius XM has already begun advocating against it. In an opinion piece, Sirius XM CEO Jim Meyer attacked the bill as being unfair to digital radio. Jim Meyer claims that by treating radio broadcasters differently this Act would again benefit terrestrial radio and imposes greater costs on digital radio. He suggested the Act should force terrestrial radio to pay for their license at the same rate as digital radio. Bringing terrestrial radio into the realm of paying for their license has struggled under the Fair Play Fair Pay Act. If Congress were to amend the CLASSICS Act to reflect Meyer’s wishes it would almost certainly quash any hope of the Act passing. Due to these factors—and the stiff resistance expected from digital broadcasters—it is unlikely that the current Congress passes the CLASSICS Act.
In summation, the CLASSICS Act would do a lot to solve the fairness problems and the legal grey area that surrounds pre-1972 sound recordings. Eventually this growing momentum will push this Act to become law, but do not expect it to be passed by the current Congress.