U.S. Court Reins In The Performing Rights Organizations

I admit I have a bone or two to pick with music rights collectives, in part because of their seeming penchant for ringing every last dime out of every possible revenue source and how that can sometimes end up hurting the independent recording artist, small labels and even songwriters. So I drew a little satisfaction this week from learning that U.S. PROs have been dealt a setback related to a PRO initiative I’ve been against from the start.

I will acknowledge that collectives in general face a tough task in their continuing battle to create some semblance of orderliness, fair play and efficiencies in the realm of rights licensing and royalty collection. The advent of the Internet and digital technology has only made it more challenging. The situation regarding certain types of song uses in the digital scene is still a work in progress, some would say chaotic, in many countries.

But back to the issue that prompted this blog.

As some of you may know, mechanical reproduction rights organizations, like CMRRA and Harry Fox in North America, have fought and won the battle to get approval for licenses on digital deliveries of music by online retailers. Good on them, for the principle behind such a license requirement is not easily argued against. However, the self-serving song and dance they employed in aggressively promoting their case to their respective copyright boards, industry and the general public–namely, that the retailers would otherwise profit unfairly at the expense of what should rightfully be going to song owners and writers–is.

The reality is that the cost of digital licenses doesn’t come out of the retailer’s pocket at all, or even the consumer’s. It’s ultimately paid for by the sound recording owner in the form of a deduction by the seller in what they remit to the owner. Retailers commonly neither raise their sale price to cover such additional imposed fee costs nor absorb them–they simply pass them on down the line of supply.

True to form, the performing rights collectives have followed the trail blazed by their mechanical counterparts and loudly beaten the same drum. They, and their larger publisher clients, have managed to convince regulators that the very act of electronically providing a customer with a digital file of music, whether paid for or as a free sample, constitutes a performance of the music, regardless of whether the file can be heard during the supply process. That’s where the logic and justification for applying a performance license to each and every digital download is lost on me.

Essentially, their argument warps the definition of a “performance” from that of a “presentation” to the act of “supplying.” Streamings, yes, I can see the possible merit there. Using music as background to enhance a website’s appeal or for ringtones? That too. But for simply transferring a file from one storage medium to another? Not in my book. It’s one thing to call it a performance when the file is listened to over the Internet or a mobile phone, it is quite another when it is not.

So, all you independent recording artists, another fee is going to be deducted from your earnings on other people’s songs you record (and quite possibly even your own originals) that you put up for sale digitally, because the retailers will be passing the PRO fee on to you, the track supplier.

But wait…is that the bugle call of the cavalry I hear?

By gosh, it is! The U.S. Appeals court may be coming to the rescue, with a recent decision that appears to rule solidly against the notion that music downloads of a song constitute a “public performance.” This will probably throw the whole matter into flux once again down south, and it will be interesting to see how this new development might affect how things ultimately play out in Canada.

For some insights and opinions on the present and future in Canada regarding digital licenses, you can go to various websites like that of SOCAN, CRIA and SODRAC. I’ll also have a lot more to say in my upcoming book and webinar series about why things aren’t always quite what they seem in this and other areas of interest when it comes to collectives.

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