[ EEPI-Discuss ] Re: more on Filesharing, compulsory licensing, taxing bits

[Dan Krimm <djkrimbo@earthlink.net>]

>Date: Sat, 14 May 2005 14:43:52 -0700
>From: Lauren Weinstein <lauren@vortex.com>
>Subject: [ EEPI-Discuss ]  more on Filesharing, compulsory licensing,
>	taxing bits
>To: eepi-discuss@eepi.org
>Message-ID: <200505142143.j4ELhrPV019765@chrome.vortex.com>
>
>
>------- Forwarded Message
>
>From: David Farber <dave@farber.net>
>Subject: [IP] more on  Filesharing, compulsory licensing, taxing bits
>Date: Sat, 14 May 2005 16:18:44 -0400
>To: Ip ip <ip@v2.listbox.com>
>
>I am strongly against such taxes. Why must I pay for things I have no
>interest in hearing.


There are several different ideas that need to be distinguished here -- not
all blanket licensing is the same.


First of all, there are voluntary collective licenses that are not
compulsory, in particular the PRO licenses (ASCAP/BMI/SESAC).  Radio
stations and business establishments pay for full catalogs in a bulk fee
and then they can use whatever they want without having to negotiate each
nickel and dime along the way.  This has a tremendously fluidizing effect
on the music-usage market.  (The problems with payola are due to other
things: mainly the scarcity of airplay that makes a difference from a
promotional standpoint.  That would not go away if you trashed the blanket
license.  In fact, it would become even more powerful.)

However, these PROs may only operate under an ongoing consent decree from
the DoJ, because they  violate anti-trust price-fixing laws.  So in effect,
there is government oversight of their actions, even though they are "per
se voluntary."  In practice this is not much different from a compulsory
blanket license, because individual artists do not have the clout (i.e.,
money to pay lawyers) to enforce their performance rights on their own.  If
you want to get paid for radio airplay, your best bet is to join up and let
the org handle it, as imperfect as that is.  That is, there is
market-derived compulsion rather than legally defined compulsion, but it
yields pretty much the same result, regardless.


As for "paying for what you don't use" -- you do that all the time in other
circumstances.  In a service model, for example, you may pay for blanket
access (like an all-you-can-eat dinner deal at a restaurant).  In a
streaming service, you don't have to purchase individual downloads, you can
just listen on demand (check out LAUNChcast for a new on-demand streaming
subscription service, extended from their earlier personalized Net-radio
service -- at Yahoo).

The idea that you pay to own a copy of a musical work is not the only
market paradigm fior recorded music that is valid and useful.  Blanket
licensing makes perfect sense for a dedicated music service like LAUNCHcast
or iTunes or Rhapsody.  Or cable TV, for example (though admittedly a la
carte pricing is starting to gain traction -- but then do you want to go
beyond per channel to per program? -- then you're just doing pay-TV, but
the rates may go up, to cover production costs with a smaller pool of
consumers to generate the revenue).


So then, extend this service model to the Internet as a whole.  You pay for
access to the Internet and that includes all the content on it.  If we
aren't compensating content creators in any other way, why not include the
price of the catalog as a bulk access fee?

And, given that usage will tend to determine who gets royalties, you only
contribute, through your usage, to allocations toward the works you listen
to.  So it can easily be framed in such a way that you don't pay for what
you don't use.  However, it's not a quid-pro-quo transaction -- it's
subsumed in a larger service model, by proportions rather than absolute
amounts.

I mean, this is not a subsidy -- it's still a *market*, where creators get
compensated in proportion to the use of their works.  If you think of the
surcharge as a "content catalog access fee" in addition to the "technical
platform access" charge that the ISP is already charging, then it's not so
onerous.


People often complain about the compulsory license known as the "mechanical
license" as a cap but not a minimum (you can opt out, but it never happens
unless it is for a lower rate, never a higher rate).  However, this is not
an effect of the blanket licensing but rather an effect of market power.
The opt-out only happens when a relatively unknown (and therefore
powerless) songwriter tries to get placed with a well-known (and therefore
powerful) performing artist.  If you negotiated the same transaction in a
"free" market you'd get the same result.  This is because you'd still
likely need a voluntary blanket licensing scheme and collective
organization in order to enforce your performance or usage rights, anyway.

The argument against says that well-known songwriters can't negotiate
similarly against unknown performing acts.  But the trade-off is that
society benefits by having a much more fluid market for derivative use in
the case of songs.  If you took away the mechanical license, then very few
performers would ever sing songs by others, and the songs would be
constrained mostly to performers who may not in fact be the bets
interpreters of those songs.  There are lots of good reasons to support the
mechanical license, because it's good for making culture available to a
broad range of society.

The labels defend the mechanical because they benefit from it, but they
oppose collective licensing for sound recordings so far, because they feel
they will not benefit from it (users will).  That's a bald double standard.
If it's good enough for composers (and publishers), it's good enough for
performers (and producers/labels).

There will probably be blanket licensing of some sort for online use of
recordings, I think -- the real question is what form it will take.  And we
want that form to be as beneficial to artists and composers (but not labels
-- please detach those separate interests!) as possible, while doing
justice to consumers as well.


And I haven't even highlighted the distinction between sampling and
derivative (creative/production) usage and distribution
(performance/purchase) usage.  Service/catalog licensing is about
distribution (as is radio), whereas mechanical licensing is about creating
a derivative work (the sound recording of the composition).

Collective licensing has a myriad of potential varieties, each of which
deserves to be considered in its own proper context on its own merits.
Applying general statements to all of these different things simultaneously
is misleading.

Dan
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