Introduction
The aspect of music copyright law is changing rapidly. Through the Internet, users have access to literally billions of songs and playlists from around the world and from all time periods. Similarly, musicians and singers can post their latest work on social media websites like MySpace or YouTube. Many popular artists today started out getting discovered on MySpace rather than through the traditional record company route.
So in light of all this, how do we keep track of property rights in original works? How does royalty collection work on the Internet? Traditionally, musicians and artists have had their works protected by becoming members of organizations that mediate between the artist and broadcasters such as radio or television stations.
These organizations are known as Performance Rights Organizations or PROs for short. In the United States there are three main PROs that have been in charge of collecting and distributing royalties for musicians. These are: the American Society of Composers, Authors, and Publishers (ASCAP), Broadcast Music Incorporated (BMI), and the Society of European Stage Composers and Authors (SESAC).
ASCAP, BMI and SESAC are the big three when it comes to collecting royalties for public performances. A newcomer on the scene is SoundExchange, which governs royalty collection specifically through digital broadcasting from the Internet. This article explores the interaction between traditional PROs and SoundExchange, and how royalties are collected for webcasts.
Traditional royalties: organization of performance rights
As you can deduce from the name, Performance Rights Organizations deal with performance, especially those that are made publicly. What they do is collect royalties from parties using copyrighted works and distribute them to the copyright holder (usually the composer). Royalties are small fees charged each time a copyrighted song is played or performed. For example, if a television station wants to use a song in one of its advertisements, the PRO will collect the station’s royalty fee and distribute it to the copyright holder.
Artists who wish to charge royalties can register with a PRO, and can only register with one of the top three. This is a different arrangement than with a record company. The difference between a PRO and a record company is that PRO’s deal with public use of songs, while record companies deal with private performance rights (ie sale of CDs, etc.).
Therefore, PRO only focuses on presentations such as live shows, broadcasts, restaurant uses, anything where copyrighted work is presented to the public for commercial use. Also note that PROs do not provide composition copyright; Copyrights are obtained from the US Copyright Office.
There are differences between ASCAP, BMI and SESAC, and artists can register with one according to their musical needs. For example, BMI tends to focus on popular and commercial artists. SESAC is a newer PRO, it has fewer artists on its registry, and it tends to focus on artists who are new to the scene, such as independent artists. However, the basic concept for all PROs is the same, which is copyright protection and royalty distribution.
How PROs Collect and Distribute Royalties: Using Tracking
In the past, PROs understandably had a hard time keeping track of every instance where a song was used commercially for profit. Today this has become easier thanks to digital technology. PROs track royalties through what is called “usage tracking.” Some PROs now assign each song a “fingerprint” that records each commercial public use instance of a song in their database. This is crucial, especially with streaming over the Internet.
PRO and webcasts
One of the main ways music copyright laws are changing is through digital broadcasts. Two laws passed in the 1990s grant a performance right to sound recordings (not just live performances). These two laws are the “Digital Performance in Sound Recordings Act 1995” and the “Millennium Copyright Act 1998”. Together, these laws now require users of copyrighted sound recordings to pay the copyright owner for digital transmissions over the Internet. Digital broadcasts include media such as Internet radio and satellite radio.
There has been a lot of controversy over these laws, mainly because of the digital transmission rates they establish. These copyright rates differ dramatically from medium to medium. For example, Internet radio users would be charged 2.9 cents / hour per listener, while satellite radio users would only be charged 1.6 cents / hour. Users of traditional radio stations, also known as “terrestrial radio”, would not be charged any fees, as there is no digital transmission involved.
The important thing to remember regarding these two laws is this: they now classify sound recordings that are digitally recorded and transmitted as performance in themselves. That is, once a sound recording is transmitted digitally, this is considered a performance and royalties must be paid for the transmission.
In effect, this creates two licenses: one for the musical composition itself and one for the recording that is transmitted digitally.
The Future of Royalties: Digital Broadcast Royalties and SoundExchange
In response to the new category created by the two laws, a new form of PRO has been created that specifically collects and distributes royalties for digital broadcasts. This PRO is called SoundExchange.
SoundExchange was created in 2000 and operates as a non-profit PRO. Its activity is designated by the US copyright office itself.In its initial stages, SoundExchange was also the subject of much criticism, again for the different rates between rates over the Internet and regular radio.
SoundExchange works in the same format as a traditional PRO, but is different in several ways. First, the company collects and distributes royalties for all artists under statutory laws, even if the artists are not members (“featured artists”) of the company. That is, they monitor and collect royalties through internet transmission. first, and then contact the artist to distribute the royalties, whether they are featured or non-featured artists.
The SoundExchange form of “usage tracking” consists of a log that is basically a list of how many times a song is streamed over the Internet. Musicians can search the list of “plays” on the company’s website to see if they are owed royalties. Also note that once SoundExchange contacts the musician, they must register with them to collect royalties.
Second, as mentioned above, SoundExchange deals with a different copyright license than the three PROs (ASCAP, BMI and SESAC). All three PROs cover the composition song, this mainly affects songwriters and songwriters. SoundExchange covers the recording itself, and this mainly affects performers.
So, for example, when Mariah Carey’s version of Journey Song “Open Arms” is played on regular terrestrial radio, composer Steve Perry receives royalties from his PRO while performer Mariah Carey receives nothing. However, when “Open Arms” is played via webcast or satellite radio, Perry still receives her royalty, but Mariah Carey will also receive royalties from SoundExchange, because it is her recording that is reproduced on the Internet.
As you can see, in theory this is supposed to benefit both the composer and the artist. In fact, artists are encouraged to join both a traditional PRO and SoundExchange, to have full copyright coverage for their songs. However, you can see how this setup could lead to confusion and royalty disputes in the future.
Copyright Law: What Constitutes Infringement?
Traditionally, copyright infringement consisted of unauthorized actions use gold reproduction of a protected work, especially for commercial purposes. Typically, this meant the unauthorized reproduction and sale of CDs, the unauthorized sampling of music in a different song, or an unauthorized public performance of a copyrighted work.
However, since digital broadcasting laws now protect the recording itself, the violation also includes the unauthorized downloading, sharing, and transmission of protected music over the Internet. This includes mp3 and is valid even after the demise of Napster and other music file sharing websites.
Other Internet broadcasts: SoundExchange association with MySpace
The next logical question in this discussion is whether other types of internet transmissions are covered by digital transmission laws. Most of the music that is currently uploaded is done on a social networking site such as MySpace or YouTube. In particular, the largest social network-type website for musicians is MySpace, which maintains a “MySpace Music” feature specifically for musicians who post their music online.
In January 2010, SoundExchange partnered with MySpace. Specifically, the association’s primary goal is to collect “lost” royalties for some 25,000 major, independent, and no-contract artists who posted their music on MySpace. In fact, SoundExchange has deposited more than $ 14 million in royalty escrow, which will be held while the company finds and contacts the artists who are owed royalties.
Previously, MySpace did not work with SoundExchange, and the new partnership represents a challenging and unprecedented project in the field of music copyright law. The partnership was announced at the MIDEM festival held in January 2010 in Cannes, France. MIDEM (Marché International du Disque et de l’Edition Musicale) is the largest trade fair in the music industry and is held annually.
Conclusion: How can I protect my works?
If you are a composer or artist, or both, it is good to double check what your rights are under each type of PRO. Also, you need to understand what the various types of webcasts are and how they affect your copyright. You can find more information on how to register with one of the top three PROs or with SoundExchange on their individual websites. Lastly, if you have registered your music compositions on MySpace Music, be sure to check if you are owed back rights through SoundExchange.
If you have questions about your copyrights and copyrights, contact an attorney who can explain your options. Using LegalMatch.com can help you find a lawyer free of charge.